Fujitsu's biggest shareholder to unload $1 billion worth of stock

A logo of Fujitsu is pictured at CEATEC (Combined Exhibition of Advanced Technologies) JAPAN 2016 at the Makuhari Messe in Chiba, Japan, October 3, 2016.Toru Hanai/File Photo

TOKYO (Reuters) - Fujitsu Ltd's (6702.T) biggest shareholder is planning to sell about $1 billion worth of the Japanese electronics conglomerate's stock, part of a plan by the two firms to unwind their cross-shareholdings.

The sale comes at a time when Tokyo-listed firms are under pressure to justify their holdings after Prime Minister Shinzo Abe's government introduced a new corporate governance code in 2015.

While cross-shareholdings aimed at cementing business ties are common in Japan, they are often criticized for making management less responsive to individual and overseas shareholders.

Fujitsu's biggest shareholder, Fuji Electric Co (6504.T), plans to unload about 8.2 percent of its stock, most of its holding. SMBC Nikko Securities has been hired as an underwriter to sell the stock to overseas investors.

Terms of the share sale have not been decided but based on Fujitsu's Tuesday closing price, the shares would be worth about 114 billion yen ($1 billion).

Fujitsu also said it plans to buy back up to 1.9 percent of its outstanding shares for as much as 25 billion yen to alleviate the impact of such a large stake sale on existing shareholders.

Fujitsu was originally created in 1935 as a telephone equipment subsidiary of Fuji Electric.

Fujitsu, also the biggest shareholder in its former parent with a 10 percent stake, said it plans to sell its holding in Fuji Electric but the timing and scale of the sale has yet to be determined.